One of the encouraging signs during the depths of the financial crisis was the then 3%+ dividend yield on the S&P 500. It was a welcome relief for those seeking out yield and in sharp contrast to the record of the prior decade. Unfortunately that attractive yield has disappeared as the market has rallied. One sector that continues to provide attractive yields is the pharmaceutical sector. The large pharmaceutical names have transitioned from growth darlings to yield plays. During this transition their stock prices have become hostage to high dividends. That cash could be used to fund additional research, etc. In today’s screencast we look at the dividend trap big pharma may have laid for itself.
Items mentioned in the above screencast:
Don’t look now, but dividend yields are now well below 2.0%. (ROI)
Morningstar’s ultimate stock pickers love pharmaceutical stocks. (Morningstar)
Eli Lilly’s dividend yield over time. (YCharts)
Has Eli Lilly fallen into a high dividend trap? (WSJ)